Shayne Higdon, Founder & CEO of the HBAR Foundation: Accelerating the Hedera Ecosystem (Part 1)

In part 1 of the interview between King Solomon from Genfinity and Shayne Higdon, Founder and CEO of the HBAR Foundation they speak about Shayne’s background and how he ended up creating the foundation. They dive deep into the process the HBAR foundation has made thus far, the metrics they use to track success in their mission, and more.

Transcription

Genfinity – King Solomon – Founder & CEO
‍Awesome, so I'm going to kick this off, guys. If you guys are not aware, Genfinity every Monday, does these Hedera Corner at 3 P.M. Eastern Time. Last week, we interviewed Dovu and Pixel Land. I'll have Valor pin that up to the top. This week, we are super excited to have Shayne Higdon, who is the co-founder and CEO of the HBAR Foundation. Shayne, I know that you're an extremely busy individual, so just wanted to thank you first and foremost for coming onto the space.

HBAR Foundation – Shayne Higdon – Founder & CEO
‍My pleasure, thanks for having me. It's always good to spend time with the community, so never too busy to do that.

Genfinity – King Solomon – Founder & CEO
‍Awesome, so I mean these are pretty straightforward, really the goal of all of these is to try to provide interviews and educational content for the community from all the builders and the people that are present within the ecosystem. So, I would like to kind of start this out if you could give us an introduction and a background of yourself in this space, and then how you kind of the steps that led you towards the HBAR Foundation, that'd be fantastic.

HBAR Foundation – Shayne Higdon – Founder & CEO
‍Yeah, sure, happy to do it. So again, thanks for everybody for tuning in, hopefully, this will be a valuable use of your time, in retrospect once we're done here. But from a background perspective, how do I get involved in crypto? I've been involved in software my entire career, started out as a developer back in the early 90s in high school and in college, and then, you know, moved into enterprise systems management software for the bulk of my career. Most recently, before this, running a division of BMC Software after it had gone private in a 6.9 billion dollar transaction, Bain Capital, Golden Gate Capital took the company private and then restructured the company. I came in as one of the presidents of their newly formed division around performance and analytics of enterprise systems, databases, applications, web applications, etc., which was a, you know, close to a 400 million dollar business at that time, and then turned around and they sold it about five years later when we were there, you know, to another private equity firm called KKR. And so then, at that point, you know, I kind of took some time off, spent time with the family for a while, and tried to decide what I was going to do next. Was investing and putting some money to work in crypto and blockchain, but with an investment thesis around where our enterprise use cases getting built. It didn't mean necessarily that I wasn't looking at degen applications and you know, decentralized exchanges, and you know, other things, but it was really for things to really take hold, it's going to have to be a global phenomenon, and it's going to have to have a simple and easy user experience where the layman layperson, you know, doesn't have to know that blockchain or DLT is underlying a given application that they are using, and so you know, we're getting there slowly as an industry. But, so to that end, you know, I was investigating the likes of Chainlink and, you know, so many others. Hedera was one of them, and like a lot of folks do, you try to understand who, you know, in a given ecosystem, to connect with them, pick their brain, etc. And I happen to know Christian Hasker, who worked for me a long, long time ago, now probably, I don't know, 17 years ago, at Quest Software, and which is a publicly traded company. At the time then was acquired by Dell, and it go private transaction. And so, you know, there's some connective tissue there between all the things that have happened, over the last couple of years. And so I reached out to Christian, hadn't talked to him in some time, and just said, "Hey, you know, I'd like to pick your brain on Hedera, what you know, what's happening, why are you working there, what's interesting?" And I'll never forget, you know, like an Englishman often does, you know, he says, very succinctly, "If you're looking to speculate on the token, we're a bit of a slow burn." And I'll just, I'll never forget that because I found that funny. And so I said, not, you know, I'm not looking for that. I'm really looking to understand the technology. Why was it different? This governing Council concept was, you know, unique and continues to be unique in, in many ways. It is a, you know, it's an Enterprise DAO, in so many ways. And so, needless to say, had a conversation with him and, you know, really came away with, at the time, there wasn't a foundation, there wasn't anyone really dedicated and focused on building the ecosystem around Hedera. And I thought the technology was unique enough, and, you know, the governing Council, there was a reason why many of these folks were, you know, many of these organizations, while large and multinational, you know, they really had innovation agendas. And so I wanted to understand that more. And so, to that end, we started the foundation, another gentleman by the name of Donald Tebow and I, you know, created the foundation. And, you know, this was, we officially started, you know, he and I last July, or actually last July, July two years ago, you know, and then we announced it, in September. And so, you know, we, we got to work, pretty quickly. So that's the background of how I got started. And, you know, it's been, you know, outside of the bear market, you know, and all of that, it's been absolutely a blast. It's been a fun seeing, you know, from the inside, you know, the vision that people have, and what I've said to the team, you know, at the foundation, solving old problems in new ways and solving new problems in new ways, you know, and building better mousetraps in so many ways. And so it's been fun. So that's how I got involved.

Genfinity – King Solomon – Founder & CEO
‍No, thank you so much I really appreciate it. And then, just so that everybody's aware, can you kind of give an overview? There's probably, asking a vague question around the foundation is probably maybe not the best way of doing it because there are so many different facets. But, maybe just an overview of where the foundation sits right now? So, I guess the question that I have around that is, you guys have 225 grants given out right now, at just over 408 million dollars. What percentage of those grants that have been given are currently live, with, you know, production use cases and the ecosystem, would you say?

HBAR Foundation – Shayne Higdon – Founder & CEO
‍So right now, I mean, you know, I would say there's, you know, I don't know, you know, that's a good question that. That was one question I really wasn't prepared, to answer with specific data. I would estimate probably, you know, three quarters of them are probably live today. There are a lot of projects. I, you know, I'll know, I'll preempt this. There was a blog at the end of the year we said, "Hey, there's going to be 80 use cases going live in Q1." You know, right now, we're on track to have 35 of those 80, in Q1. And so, when you look at that, you say, "Well, wait a second, there's, you know, 45 of them that, you know, didn't go live." And so, I want to take a moment to explain, you know, kind of what we have to do as a process to try to understand, and in many ways try to validate the founding teams of these projects, and determine, you know, when they tell us to go live, date, and slipped, etc. We do not, you know, outside of giving grants, we want to be a good partner. So, as we've said, we provide, you know, financial, you know, marketing support, particularly around social, you know, as well as technical support. So, we work with the projects to make sure that what they've built, what they're building, you know, is efficient, leveraging the APIs that, you know, we have inside the ecosystem, etc. And so, in many cases, you know, it's software. In all cases of software, but in many cases, we say to the project, you know, "When do you guys think you're going to be live?" And they'll give us a date, like, you know, a lot of projects do. And if you've been in software, you understand there are a lot of factors that determine, you know, when a project can go live. Despite the move for those developers out there from waterfall methodology to more of an agile methodology, and while Agile's supposed to be more real-time efficient, you know, you've got shorter sprints, etc. You know, and various scrums that you do daily. Assuming you've got good, you know, development hygiene, it's still difficult to say, "Okay, now's the time where we're going to go live." And so, all of our business development folks try to connect with, and while we've made 225 grants, we've got more than that that we're actively you know, negotiating with in terms of contracts and other things. Our business development resources and team reach out and they say, "Hey look, you know what? When do you think you're going to go out? It's going to slip a month." Okay, well great. And we try to poke at that and try to understand, but you know, in many ways, it's the best data that we've got. And you know, in the interest of transparency, we try to give the best direction, you know, we can to the community as to what we're being told internally. From a process perspective, we've got some things that we've built that we think are going to help this. We have a grantee portal where, you know, we're going to require that most of the grantees log into that portal to give us, you know, more real-time status updates on their projects. Again, I think, you know, some may not log in, others, you know, hopefully will log in and feel a sense of, you know, obligation to both the foundation and the community, you know, for, you know, taking a chance and giving them a grant. So I know it's a long-winded answer, but I, you know, I certainly track, you know, a lot of things in the social media environment. And while I haven't responded directly to anybody's ask on the 80 different use cases, I wanted to provide more context in how we try to arrive, you know, at those numbers. Now, last, last comment on that, I could have haircut the 80 and said, "Oh, it's going to be 50." You know, even still, you know, I don't know at each and every time all of the projects and how and what's going to cause them to delay going live on the network. And so we just try to get the best data that we can from each of the projects and hope, in many ways that we've asked the right questions to, to make sure that, you know, we've got a fairly, a fairly solid number. That said, we've been doing this now for, you know, almost two years. It'll be, you know, well, I say almost a year and a half. Certainly, we've been doing this, and, you know, we're going to continue to learn. We're going to continue to get better. We're going to continue to understand, you know, one of the things that we're starting to track from a metrics perspective is what is the lead time when, you know, we've made a grant to someone, they start, you know, building. What's the time it takes from the initial grant to actually going live on average. We don't have enough data points yet to begin using those types of business metrics, but there's, there's quite a few of those things that, as we get more history under our belt, we'll just continue to refine and get better and better.

Genfinity – King Solomon – Founder & CEO
‍No, that's, I mean, that's a great answer, actually. You answered like two or three of my other questions during that answer. So, and shout out to Crypto Cash. You asked about the 80 use cases. I know that Shane just touched base on that. You briefly touched base on operational support as well, which was one of my questions around operational support surrounding tech, marketing, and business development. Since you kind of already did discuss that, I would maybe rephrase the question that I have and ask, you know, how often do projects that have received grants through the Foundation, normally check in with you guys. I think you did mention some aspects. Is it like bi-weekly, monthly? Does it depend on the size of the grant? We'd love to hear your thoughts on that.

HBAR Foundation – Shayne Higdon – Founder & CEO
‍Yeah, on average, I would say it's monthly. We know that, you know, with 225 grants and we don't have a ton of employees, you know, at the Foundation, we've tried to be very efficient. You know, we realize, you know, as do others, we're funded by HBAR, and so we haven't gone and hired, you know, a hundred people. We haven't even gone and hired, you know, 40 people, right? It's, you know, I think right now we're sitting at like 29 people. So, you know, to do the work that this team has done, is incredible and to me, and so, you know, to have these folks, and not all of them, by the way, are business development, is only a fraction of the Better Business Development reaching out, to these projects and doing so on a, you know, monthly basis, I think is great. But we've also realized that, you know, that's tenuous, it's difficult, right? You're sitting and you're trying to call these teams and scheduling conflicts and other things, so we wanted to be, more automated and put some of the responsibility back on the projects to report to, you know, us and, ultimately, we can report to, you know, the community how things are going. So, we have embarked on, this idea of what's called a grant operating system, that's my term, that, you know, to be able to make grants, to be able to track grants, the stages, you know, of project and in terms of their go-live or in development, etc. And this takes, you know, there's a several there's a lot of back-office systems that are required to do this. And so, you know, that is, it's really important because we need to track, you know, metrics that the community cares about, things like, you know, TPS, right? And everybody knows that, and, you know, because that generates, you know, not only transactions, but it's an indication of interest, in use and utility on the network, all very, very important. You know, people care about the number of accounts and account growth, right? We're, you know, almost eclipsing two million accounts, and you know, there's just a lot of positivity. I remember when we started the foundation, there were only 330,000 accounts, and this was, you know, call it September or August of the of 2021. And, you know, here we are, you know, almost 2 million accounts, and there are some use cases, you know, that are going to be launched on the network that are going to be orders of magnitude in terms of both TPS and account volume. And so, all of those things are exciting, but we've got to, we've got to make sure that operationally, we're able to track how we're doing and what we're doing. And one of the things that you mentioned, was the 225 grants and almost 400 million dollars you know, I think it's also important, you know, because people are concerned. And, well, I can't. I'm not directly responsible for, you know, the tokenomics. The tokenomics have been baked in from the beginning of the network, but what we believe and what we've done is we wanted to be good stewards of the Hbar and capital that we've been given. And so, a lot of that 400 million dollars, we didn't just write checks, you know, say checks, you know, euphemistically. We didn't just write checks and go give people a bunch of money. We, you know, 90 plus percent of the dollars that we've allocated have milestone, either time-based or performance-based milestones to get to, the next phase of a given grant. Why is that important? That's really important because we want to make sure that we're not putting good money after bad, that we didn't just write somebody a check and say, "Go," and, you know, they go cash in, you know, all the Hbar, and they never deliver anything, right? That's a rug pull. So we're like, "No, we're not going to do that." And so in our experience, you know, the executive team that we have is absolutely world-class. And so we put a lot of things in place that said, "Hey, you know, here's enough to go get started and prove that, you know, you're worth, you know, what you say and can build what you say you're going to build, and that you really find a product market fit. And if you do, by the way, we're willing, you know, milestone two, three, four, etc., willing to pay for that." but, you know, and that's really important because while we got, you know, a grant, you know, to the tune of 5.35 billion HBAR that everyone knows, you know, we didn't just turn around and give away, you know, 400 million dollars worth. So that's really, really important, I think, if I am, you know, a community member, to understanding, you know, how we operate. And, you know, I think that, you know, as we think about, uh, you know, moving forward, and we're continuing to get, you know, smarter and smarter, and, you know, right-sizing, you know, and investigating the teams, the grants, etc., you know, myself and, our COO, David Kramer, we both have, venture backgrounds, not that we work for venture capital firms, but we created a venture arm of Quest Software. So we've been doing this for a long, long time. And, you know, when we think about how do you evaluate, again, a project, you know, it's idea, it's the technology used, it's the team behind it, you know, and it's, you know, what they believe that they've done to find product-market fit. So that when you think about this risky asset class of crypto, you don't necessarily have to be funding, you know, a risky project, right? You can try to de-risk some of that by learning the backgrounds of the team. And oftentimes, you know, if a founder, you know, has failed in an entrepreneurial effort, you know, previously, it's not to say an automatic great, we're going to write them a check, but we do want to understand that, because if they've tried it and they understand why a project failed, why they failed personally, you know, was it something that they did? Those learnings, that self-reflection, I think is really, really important when we think about, you know, giving someone a grant. And, so you know, that's there's a lot wrapped into that but, you know, this is, you know, a lot more complex than I think you know people might appreciate in the community.

Genfinity – King Solomon – Founder & CEO
‍Yeah, yeah, I understand. So, I wanted to, I wanted to say real quick, we have 54 people in here. Would love to get as many people from the HBAR, from other communities that enjoy these types of interviews to share it, if you guys possibly can. I'm not going to do the click the like and subscribe button if you want to hear more cheesy, but you know, I did want to kind of move into some of the metrics and some of the questions around, the plan moving forward. The one thing that you touched base on, Shayne, previously, was data sets and having enough data to pull, to be able to take, you know, past all the past actions that the Foundation has made to be able to plan, plan a program appropriately moving forward. So, the question I wanted to ask around this is, what key performance indicators, and I have to give a shout-out to at dk33202 water for this question, what key performance indicators does the Foundation utilize right now to measure success?

HBAR Foundation – Shayne Higdon – Founder & CEO
‍Great question, and so we have a system called vision, mission, goals, and initiatives, and so we, at the Foundation level, have outlined our vision, our mission, we've communicated that to the community, and then goals and initiatives at the highest of levels, and our goals have been grow, you know, the awareness, accelerate access, and increase Commerce on and in the HBAR economy. Those were the three goals, and then we had a set of initiatives. The initiatives initially were aligned to areas of market growth and things that we knew didn't exist in the ecosystem, and that's why we created the crypto economy fund, that's why we created the, what was originally the consumer loyalty and engagement fund, now called the metaverse fund, the third was the payments in fintech fund, and then the sustainable impact fund. We had a couple of what I'll call market development funds, much smaller funds focused on female founders. So, if a woman owned at least 30 percent of the cat table of a given project, you know, that was an opportunity, and then the decentralized identity, and so we wanted to align for areas that we knew that we take the crypto economy fund as an example, you know, when the foundation started, we didn't have any decentralized exchanges, we didn't have a lot that would be considered traditional crypto, and we didn't have, you know, we didn't have a Coinbase listing, we didn't have all of the on and off ramps that we needed, you know, to have a healthy system of liquidity and other things, and so we worked on, you know, with various grantees you know, in building that and very successfully, and so very pleased. Shout out to all of those projects, that have been a part of this ecosystem. And so, those were the initiatives and making sure that we understood those things. At the highest level, though, when you think about those vision, we then wanted to say, okay, so what are the metrics? And we've got some key metrics that we were originally focused on. One was, what was the ranking related to, you know, coin market cap? That was an indicator of growth in the ecosystem moving up. That the second was average TPS. The third was active account growth on the network. We did not have, at the time we had, we didn't call it TVL at the time because that wasn't necessarily the term du jour. It was more of a, you know, what was the value creation metric on the network. We ultimately then did call what's TVL on the network, but a couple of other things, one was smart contracts, right? Keep in mind when we started the foundation, we didn't have smart contracts. Those weren't lost until February of last year. We didn't have EVM compatibility, etc. But while EVM compatibility was not a metric that we tracked, TVL was smart contracts and then token assets created. So those were the measures of how we were looking at, you know, increasing commerce, accessibility, and awareness on the network, achieving our goals. Since then, what we began working on is how does that cascade down inside the organization so that every function and every fund has its own vision, its mission, goals, and initiatives that then align and support the overall goal of the Hbar foundation. And so we've been working on those things, and I would bore you with, the number of metrics. We've tried to keep it fairly simple, you know, because you can get in, you know, you could just measure everything under the sun. But how do you get to meaningful things that you measure to help make business decisions off of and so that's where we're continuing to refine it. And I've been very pleased with, you know, the work that the team and our chief of staff have been doing around that cascading effort because we've got to, you know, we've got to make sure that, you know, we are putting our efforts in the right place to give us the kinds of growth in the ecosystem that we would hope for.

Genfinity – King Solomon – Founder & CEO
‍No, that's a great answer. Thank you so much, Shayne. I did want to ask too, and this is, I'm not, I don't want to get into price speculation, but I do think from the foundation standpoint, I'm sure that you guys are measuring out the next year or two years. So, I guess, you know, let me try to phrase the question this way. How difficult has it been to effectively or to efficiently deploy capital or deploy, you know, grants in a bear market versus what is the plan, kind of assuming that the market as a whole picks up over the next year to two? Does that open up more doors for you guys to effectively deploy more grants out in this space? I know it's kind of a common sense answer, but if you could put, if you could maybe touch on, you know, the past year or two versus the next year or two, and just, you know, kind of what aspects that might open up without getting into price. But I know it's for, what it kind of is, price speculation, but what does that do for the foundation? If HBAR gives you more capital, you know, if there's more capital to potentially deploy into the ecosystem for grants.

‍HBAR Foundation – Shayne Higdon – Founder & CEO
‍Yeah, great, great question, and look, it's, and I can answer the question without speculating on price, you know, at the end of the day, you know, a dollar-denominated grant, the lower the price of HBAR, the more HBAR it's going to take to fulfill that dollar-denominated grant period. I mean, that's just, you know, math, and so you know, in this kind of environment where, you know, the token price has been, you know, more depressed, you know, it's certainly been more challenging. We've had to get smarter on and, and frankly, we've had to say no to some projects because, you know, the length of time that it would take to get a project to market and the amount of money required, that it would take was just simply too high in a market like this. If you rewind to, you know, the beginning of 2022 when, and we in earnest made our grants, and let me give you some timelines, so we, we received an initial set of our tokens in November of 21, literally right before Thanksgiving. They were locked up, you know, and so there wasn't anything at that point that we could do, so we were actually giving some grants in cash to begin and not a ton of cash, but just some grants in cash to be able to start our grant-giving efforts. But in earnest, we started in February of 2022 making grants that, you know were locked up, you know, for the grantees, and you know, that at the time, I think the token price was around 25 to 30 cents, if I recall. And so, you know, dollars, not many grant didn't take as many HBAR to make at that time. And so, you know, when the token price goes to three or four or five cents, it just simply, it simply takes more. We, you know, we're really aggressive at the beginning of last year because we knew, as an ecosystem, you know, both in terms of treasury to build the ecosystem, we were smaller than some of the other, you know, layer ones in the industry, and we needed to get to work. We were, you know, we didn't have, and had not focused for a lot of reasons on, you know, DeFi, and we needed to get to work, and we did that. And that's why you see, you know, such significant progress in the course of, you know, of a year or 225 grants, and you know, 400 million dollars deployed. And so we have, you know, we got moving, we cast a wide net, making sure that, you know, we were deliberating. You know, and getting a lot of project X building on top of the network, and that's what we did. And then moving into this bear market, you know, we, we were able to be more selected, selective on the teams, the technologies, the size of the market. So, you know, many of the teams, help us understand, you know, the size of the total addressable or total available market that you're going after and why you think you were unique in being able to do that. So we could refine our processes related to the amount of, you know, grant sizes that we would give. You know, and created more of a, you know smaller grants that we can move quickly and they can prove themselves, and you know, then we could, you know, determine, you know, if we, if we gave them more.